management and organization behavior report on decision making

D e c i s i o n M a k i n g

Decision Making

Greening The Green Trading Ltd

Prepared for

Course Instructor: Prof. Md. Salim Bhuiyan

Course Title: Management and Organizational Behavior (MGT:506)

Prepared by

Apu Ghosh (ID:113123004)

Md. Masudur Rahman (ID:113122003)

Mohammad Saifur Rahman (ID: 113123001)

Gazi Tauhid Ahmmed (ID: 112123027)

Shihab Khan (ID:112121003)

Section: A, Fall Semester 2012, MBA & EMBA.

United International University

Date of Submission: 11.01.2013

D e c i s i o n M a k i n g Page 1

Decision Making

January 11, 2013.

Prof. Md. Salim Bhuiyan

Adjacent Faculty

United International University

Subject : Letter of transmittal.

Dear Sir,

We are submitting you the report, due on January 11, 2013, that you requested. The report is entitled Greening The Green Trading Ltd. The purpose of the report is to inform you the decision making process that has grown after completing the Management and Organizational Behavior (MGT 506). The content of this report analyze the management crisis of the company that fell impact on the profit and how a decision making could help the top management to overcome the problem.

We really appreciate the efforts and the assignment that helped all of us to synchronize altogether and learn the decision making process practically by analyzing every situation and learnt how to overcome management crisis in real life.

Sincerely,

Apu Ghosh (ID:113123004)

Md. Masudur Rahman (ID:113122003)

Md. Saifur Rahman (ID: 113123001)

Shihab Khan (ID:112121003)

Gazi Tauhid Ahmmed (ID: 112123027)

Section A MBA, Fall 2012


Decision Making

Introduction:

Decision-making is an essential aspect of modern management. It is a primary function of management. A

manager's major job is sound/rational decision-making. He takes hundreds of decisions consciously and

subconsciously. Decision-making is the key part of manager's activities. Decisions are important as they

determine both managerial and organizational actions. A decision may be defined as "a course of action which is

consciously chosen from among a set of alternatives to achieve a desired result." It represents a well-balanced

judgment and a commitment to action.

It is rightly said that the first important function of management is to take decisions on problems and situations.

Decision-making pervades all managerial actions. It is a continuous process. Decision-making is an

indispensable component of the management process itself.

Means and ends are linked together through decision-making. To decide means to come to some definite

conclusion for follow-up action. Decision is a choice from among a set of alternatives. The word 'decision' is

derived from the Latin words de ciso which means 'a cutting away or a cutting off or in a practical sense' to come

to a conclusion. Decisions are made to achieve goals through suitable follow-up actions. Decision-making is a

process by which a decision (course of action) is taken. Decision-making lies embedded in the process of

management.

A manager has to take a decision before acting or before preparing a plan for execution. Moreover, his ability is

very often judged by the quality of decisions he takes. Thus, management is always a decision-making process.

It is a part of every managerial function. This is because action is not possible unless a firm decision is taken

about a business problem or situation.

This clearly suggests that decision-making is necessary in planning, organising, directing, controlling and staffing.

For example, in planning alternative plans are prepared to meet different possible situations. Out of such

alternative plans, the best one (i.e., plan which most appropriate under the available business environment) is to

be selected. Here, the planner has to take correct decision. This suggests that decision-making is the core of

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Decision Making

planning function. In the same way, decisions are required to be taken while performing other functions of

management such as organising, directing, staffing, etc. This suggests the importance of decision-making in the

whole process of management.

Contents: Page no

1.1 A brief overview of our company . . . . . . . . . . . .. ………………………..1

1.2 The objective of our company……………………………….................1

1.3 Products / services of our company………………………..................2

1.4 Employees of our company…………………………………………….2

1.5 Annual total revenue, total cost and profit of our company…………4

1.6 Current problem that we are facing …………………………………...5

1.7 Importance of our decision making ……………………………….....6

1.8 Identifying the causes of current problem…………………………...6

1.9 Developing alternative solutions……………………………………...7

1.10 Our Decision to Solve the Problem and Justification………………8

1.11 SWOT Analysis…………………………………………………………10

1.13 Conclusion………………………………………………………………14


Decision Making

Assignment Topic

Assume that you are the top executive of an organization. Now think of a

decision which will bring significant change in your organization. Justify why

do you want to take such a decision & how will you implement it.

Answer

1.1 A brief overview of our company

We are running a trading company, which in involved in joint venture projects in

Nutritional products, Animal feed Mills, Pharmaceuticals both for Human

and Veterinary medicines, Coatings and representing as an exclusive marketing

agents for International brands products. The name of our company is “Green

Trading Ltd”. The head office of our company is located in Dhaka with 7 branches

in the commercial towns. Those are situated in Chittagong, Barisal, Sylhet, Rajshahi,

Khulna, Gazipur and Narshigdi. The distribution network is carried out in the rest of

the country through 100 appointed dealers located in important cities and towns. The

Company has 114 full time efficient and dedicated employees, who believe in

teamwork to materialize the objectives set by the management. Our company as well

as our service to our customers is well reputed one and renowned for its dedicated

and professional service in the field of trading business in Bangladesh.

1.2 The objective of our company

The objective of the Company is to provide professional services and good quality

products to the consumers in Bangladesh through efficient team and net work. This

objective is perused keeping in mind respect for the customer needs and

satisfaction. The Company’s continuity is achieved through commitment to hard

work, growth and profitability .Our aim is to remain as a leading marketing

organization by rendering efficient services to our customers and to be a respected

member of the society.


Decision Making

1.3 Products / services of our company

The major range of products we handle includes pharmaceutical finished products,

animal health care products, feed premixes, day old chicks, pharma-active materials,

packaging materials, car paints, protective coatings, milk powder, industrial

chemicals and several other items. Green Trading Ltd. is representing reputed

Multinational Companies in marketing their products in Bangladesh.

1.4 Employees of our company

In our company there are three levels of employees - Top, Mid and Low.

Top level employees include:

Designation Number of Employee Base

Chairman 1 Head Office

Vice-Chairman & CEO 1 Head Office

Managing Director 1 Head Office

General Manager

Deputy General Manager

1

1

Head Office

Head Office

Mid level employees include:

(1st Tire)


Manager - Marketing 1 Head Office

Manager - Sales and Distribution 1 Head Office

Manger - Trading 1 Head Office


Decision Making

Manager – Accounts and Logistics 1 Head Office

Manager – Business Development 1 Head Office

Manager – Technical Service 1 Head Office

Manager – Commercial and Regulatory

Affairs

1 Head Office

(2nd Tire)


Area Manager – Marketing 8 Head and

Branch Offices

Area Manager - Sales and Distribution 8 Head and

Branch Offices

Deputy Manager - Trading 1 Head Office

Deputy Manager – Accounts and Logistics 1 Head Office

Deputy Manager – Technical Service 1 Head Office

Deputy Manager – Business Development 1 Head Office

Low level employees include:

(1st Tire)


Executive – Marketing 10 Head and

Branch Offices

Executive - Sales and Distribution 11 Head and

Branch Offices

Executive - Trading 6 Head and Branch


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Offices

Executive – Accounts and Logistics 13 Head and

Branch Offices

Executive – Technical Service 7 Head and

Branch Offices

Executive Secretary to top level managers 3 Head Office

(2nd Tire)

Designation

Store Keeper

Number of Employee

2

Base

Head Office

Delivery Assistant 11 Head and

Branch Offices

Peon 10 Head and

Branch Offices

Driver for delivery vans 9 Head and Branch

Offices

1.5 Annual total revenue, total cost and profit of our company

The annual total revenue of the company in 2011 was Tk. 400 millions i.e. 40 crore.

Our daily sales capacity is on an average Tk. 10 lac per day with the present working

speed possessed by our low level workers especially. But it is believed that our

workers can earn more for us. However, we are satisfied with this rate as the profit

earned for our company in the present socio economic context is above average.

The expenditure for our company takes place in different stages. It involves office

maintenance, staff salary, yearly tax, transportation for carrying goods from

Chittagong Port to Dhaka and to branch offices, inventory and storage cost, product

delivery costs etc. In 2011, our annual expenditure was Tk. 36 crores and thus the

net annual profit was Tk. 4 crores. Our daily profit target ranges within Tk. 95,000/=


Decision Making

to Tk. 1,00,000/= The profit per day varies slightly because of multiplicity of causes.

This profit goes to mother fund/fixed deposit account for future project extension or

as a backup for future adversities.

1.6 Current problem that we are facing

As we monitor regularly, it has been the matter of great concern that we could not

reach to our target for last few months in 2012 and daily profit margin has fallen to

Tk. 80,000/= to 85,000/=. We had deviation from our set target and also deviation

from past achievement. In 2012, our low level employees seemed to be less

productive and de-motivated; On the other hand some of our mid level employees

left the company getting good offers. As the three functions of management (leading,

organizing and controlling) got disrupted in the last few months of 2012 our profit per

day decreased for Tk. 15,000/= to 20,000/= as from estimated limit because of lower

sales. Also for this low sales rate, our inventory cost increased and some of the

agro products got damaged. As a result our annual profit came down to Tk. 2.8 crore

at the end of year 2012. We are afraid that if this trend continues we may lose

potential customers. The goodwill of our company is also under threat.

Our current problem can be represented through the flow chart below:

High Rate of Employee Turnover at Mid Level

Low Productivity among Low Level Employees

Management Functions (Leading, Organizing, and Controlling) are disrupted

Marketing Strategy has weekend and Daily Sales Revenue Decreased


Decision Making

1.7 Importance of our decision making

As top level executives we should always try for the higher productivity. As the

current problem is hampering the productivity we need to take a decision that would

bring significant change in our profit and as well as would solve the problems

regarding our human resources. It is said that management involves 6 M (Man,

Material, Machine, Method, Money and Market). Among these 6 M, Man (Human

Resource) creates major problems for a manager. So, an effective decision making

has significant role in this regard.

In making our decision we have followed the due steps of decision making process.

1.8 Identifying the causes of current problem

As we found deviations from our set plan and previous experiences we carried out

an internal survey on immediate basis to identify the reasons and root causes of our

current problems. The found causes are interconnected in most of the cases.

a. For the last few years the cost of living has gone up significantly in

Bangladesh that caused the mid-income group to fall under a threat. Majority

of our mid and low employees’ income is spent for buying regular food items,

house rents and conveyances. As a result we have found that mid and low

Inventory and Storage cost Increased/ some products got damaged due to mishandling

Daily / Annual Profit Decreased

Company is under threat of Financial Loss and Goodwill may be hampered

Daily Sales Revenue Decreased


Decision Making

employees are very much dissatisfied with their current salary structure. They

are depressed with the price hike that made their life miserable than earlier.

b. As fuel price has increased employees are to spend more on their

conveyances. Again hectic traffic and poor public transport facilities are

restricting them to come to work on time and to concentrate in work properly.

That has put impact on their productivity.

c. Our competitor companies are offering competitive remuneration

packages to our very efficient mid level managers. As a result, some of them

left the organization.

d. As some of the efficient mid-level employees left the organization one

after another, our company is now having management crisis. Leading in

departmental level, organizing and controlling had been hampered and that

has resulted into indiscipline among the low level supervisee’s. They are not

getting due direction and not paying attention to their work.

e. Among Mid and Low level workers, who are mediocre and not getting

opportunities to switch to other organizations has become frustrated and de-

motivated and as a result they have lost interest in their works. It has direct

impact on our decrease of sales.

f. So the employees want increase of payment and who are based in

Dhaka are demanding transportation facilities to workplace.

1.9 Developing alternative solutions

We came up with two solutions after analyzing the situation and these are:

1. Hiring more efficient sales and marketing executive with attractive salary

package to put an impact on the market and maintain the profit.

2. Maintain the present stuffs and empower them by training and developing

their capacity and motivate them with better package by reviewing the salary

and incentive scheme.

We know that our problem has alternative solutions. To develop alternative solutions

we have used the available sources. Those are:


Decision Making

We had a brainstorming session involving top level executives, i.e. our

Chairman, Vice Chairman and CEO, Managing Director and General

Manager.

We talked to some of our mid and low level employees. We have also taken

opinion from the ex-employees who left the organization recently.

We hired a consultant to analyze and review the problem and to propose

alternative solutions for us from a third eye view so that the alternative

solutions befall neutral.

With our guidance the consultant carried out a short term research with the

objective of :

o Review of existing salary structures in terms of job responsibilities and

comparing with organizations for similar responsibilities to maintain

external equity with market demand.

o Review of benefit and compensation package and to make a

comparative analysis with similar organizations in Bangladesh.

o Review and come up with analytical remarks on salary matrix and

benefits and other facilities.

1.10 Our Decision to Solve the Problem and Justification

Considering the facts that our employees are dissatisfied with their salary and

benefits we are to take a major decision. We believe that employee are our assets

and they can contribute to our profitability if they are empowered properly.

Major Decision

We will increase the salary for all level of employees. Here we will follow the

Cost of Living Adjustment (COLA) method and would also consider the

market demand and competencies of our employees. So, the increment will

not be of same percentage at all level.

So the increment would be as follows:

Top Level: 5%


Decision Making

Mid Level (1st Tire): 15%

Mid Level (2nd Tire): 10%

Low Level (1st Tire): 12%

Low Level (2nd Tire): 8%

Respective Justification

Based on our review result, we have found that:

a. Our salary package offered to mid-level and low level staff is not competitive

and do not match with the market demand. So, turnover rate is high among

our most efficient managers. They are keen to switch organization if they get

good offers from other companies.

b. Among Mid and Low level workers, who are mediocre and not getting

opportunities to switch to other organizations has become frustrated and de-

motivated and as a result they have lost interest in their works. It has direct

impact on our decrease of sales.

c. For the last few years the cost of living has gone up significantly in

Bangladesh that caused the mid-income group to fall under a threat. Majority

of our mid and low employees’ income is spent for buying regular food items,

house rents and conveyances.

d. So our decision of increasing salary would bring significant change in our

company by motivating the employees providing incentive to them.

e. As top level employees are already highly paid, their increment is the lowest.

Our efficient mid level (1st tire and 2nd tire) employees are keen to switch job,

so incentive is the highest to retain them based on market demand analysis.

Our low level (1st tire) employees play key role in sales and distribution so

their incentive is higher than the mid level (2nd tire). Our low level (2nd tire)

employees are given incentive as per market demand analysis.


Decision Making

Subordinate Decision

Since every problem has got more than one solution so we will also take some

additional motivational decisions phase by phase, which also act to satisfy our

employees especially who are based in Dhaka and having transportation problem.

We will provide transportation facilities to our Dhaka based staff. Apart from

the top level employees we have 23 employees in our Dhaka office. We

would rent microbuses on monthly basis to provide them with the facilities.

Respective Justification

Based on our review result, we have found that:

a. As fuel price has increased employees are to spend more on their

conveyances. Again hectic traffic and poor public transport facilities are

restricting them to come to work on time and to concentrate in work properly.

That has put impact on their productivity. Providing transport to work would

solve the problem and would maintain in-time to work properly.

1.11 SWOT Analysis

As top level executives we cannot take a decision, which will satisfy all the

concerned people. There are merits and demerits of our decision. While taking

decision we have to comply with both the merits and demerits of our decision. Here

we have mentioned the Strength, Weakness, Opportunities and Threats of our

decision.

1) Strengths

The attributes of the decision that is helpful to achieve the company objective is

called the strengths.

a. We will be able to achieve our estimated daily sales and profit target again

after implementing our new decision as it will motivate our employees and

their productivity will increase.

b. This decision will help to restore our goodwill which is under threat now.


Decision Making

c. Employees will be more benefited as well as the company. Better employees

would ensure better service.

d. Satisfaction level of worker will increase and thus we will be able to increase

the productivity rate.

e. Transportation facility will ensure in-time to work properly and reduce daily

hassle of the employees.

2) Weaknesses

Attributes of the company those are harmful to achieve the company objectives is

called weakness.

a. One major concern is the cost of extra budget which was not included in

financial year so some unexpected cost will be added with yearly

expenditure.

b. May some other factory already using such similar ideas to reduce

dissatisfactions.

c. Since we cannot provide their expected salary in line with the actual inflation

rate so may be some de-motivation will still remain after implementing the

decision all types of decisions.

d. The different percentage for different tires and levels may cause

disappointment among the employees.

3) Opportunity

Opportunities are those external conditions that are helpful to achieve the objective.

So in order to make our roots deeper into the market, we will get those opportunities

in future.

a. Since we will be able to run our production smoothly without any

interruptions, we will be able to trade more products at a cheaper rate & in

shorter time.

b. Many companies may be unable/ have that much courageous to invest

huge amount of money to increase salaries & take the benefit of such

decision.


Decision Making

c. Government will appreciate and may provide support for our company. We

may get strong financial response from other financial organizations if we

want to extend.

d. We might draw more efficient and dedicated workers from other trading

companies as we will offer competitive packages and transportation facility

after implementing our decision.

4) Threat

Threat means external barriers for a new product or service.

a. Other trading companies may also follow our decision more effectively and

thereby snatch our efficient employees.

1.12 Action Plan – How to Implement the Decision

A plan may sound very high but it will not bring any result unless it is implemented.

Plans are to be implemented. So we should make a realistic & logical action plan &

act accordingly to reach our objective.

Action plan

1. First we will calculate our existing staff salary cost and increased salary cost

and transportation cost and estimate the added expenditure required to

implement our decision.

Level and Tire Current Salary Cost

(per anum)

Increased Salary cost

(per anum)

Top Level : 5 persons 1,95,00,000/= 2,04,75,000/=

Mid Level (1st Tire): 7

persons

91,00,000/= 1,04,65,000/=

Mid Level (2nd Tire): 20

persons

1,56,00,000/= 1,71,60,000/=


Decision Making

Low Level (1st Tire): 50

persons

1,13,75000/= 1,27,40,000/=

Low Level (2nd Tire): 32 4,160,000/= 44,92,800/=

Total 59,735,000/= 65,332,800/=

Extra amount needed Tk. 559,7,800/=

Transport cost per annum

2 micro buses (12 seated) monthly

rent and fuel

25 Days * 2500 Tk * 12 months * 2 =

15,00,000/=

2. We have to make plans on how to recover the cost of our new decision. We

will set new sales target that will recover our extra cost without hampering our

profit target. As shown the calculation above, this investment will bring a

significant change of workers working behavior with a very small investment.

If we can achieve our daily sales target to TK. 1000000/= then it would not be

a problem to recover the extra cost. Ultimately their job satisfaction will make

them to do their job more effectively. Per day sales will be high and this extra

sales profit will be given them as new increased wages and also

accommodate the transportation cost.

3. We will set controlling and evaluation mechanism to retain our new sales and

profit target.

o We will make a networking system among all the supervisors, so that

we can sense any human resource related problem time before hand.

o We will always keep a reserve fund & all the necessary parts ready so

that we can use them whenever we need.


Decision Making

o We will analyze our performance every year so that we can come to

know about the current market scenario.

1.13 Conclusion

We think new decision, which came out eventually with the problems we are facing,

shall not only benefit our company but also uphold our country as well. This is

because more trading companies will become interested to increase salary if they

can strike the balance like we did between disciplines, giving workload, ensuring

facility for the workers and rather make more profit than loss by utilizing the

capability of our workers. May be we will need some extra money at the beginning

but after setting up we will be able to make greater profit & our investment will be

make up within a reasonable time. We will become one of the competitive

remuneration payer company in our country and thus our reputation will go high.

Efficient employees will be attracted to join our company and we together will ensure

better quality of products and services.

management and organization behavior report on decision making

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